a As of January 1, 2017, reporting of contract customers in business customer operations excludes test cards (minus 41 thousand). In addition, there was a one-time effect in the Business Customers segment from a change in system reporting for prepay customers (plus 180 thousand). Prior-year figures have not been adjusted.

Total

In Germany we continue to be market leader both in terms of fixed-network and mobile revenues. This success is attributable to our high-performance networks. We offer best customer experience with multi-award-winning network quality – in the fixed network and in mobile communications – and with a broad product portfolio. So far, we have won 3.6 million customers for our integrated product, MagentaEINS.

In mobile communications, we won another 1.1 million customers in 2017. Thanks to strong demand for mobile rate plans with integrated data volumes, the number of contract customers under our Telekom and congstar brands grew. We also recorded substantial growth in the number of prepay customers.

By the end of 2017, we had already migrated 17.3 million retail and wholesale lines to IP, which corresponds to a migration rate of 69 percent.

Strong demand for our fiber-optic products continued. The number of lines increased to 9.6 million overall by the end of 2017, which means we connected 2.8 million lines to our fiber-optic network in Germany over the reporting year. With the progress in fiber-optic roll-out and innovative vectoring technology, we also successfully drove forward the marketing of higher bandwidths. With our contingent model, we create incentives for the migration from traditional wholesale products – such as bundled wholesale lines or unbundled local loop lines (ULLs) – to higher-quality fiber-optic wholesale lines.

Mobile communications

In 2017, we won a total of 676 thousand contract customers under the Telekom and congstar brands and at Telekom Deutschland Multibrand GmbH. The contract customer business of resellers (service providers) remained at the prior-year level. The number of prepay customers increased by 428 thousand.

Fixed network

Due to the persistently challenging development in the fixed-network market, primarily owing to aggressive pricing offers of competitors, we are pursuing new paths in marketing, focusing on integrated offers and on TV and fiber-optic lines. As a result, the number of broadband lines increased by 287 thousand in 2017 compared with the prior year and the number of TV customers rose by 260 thousand. In the traditional fixed network, the number of lines decreased by 547 thousand.

Our MagentaZuhause rate plans offer a comprehensive product portfolio for the fixed network based on IP technology and rate plan-specific bandwidths. MagentaZuhause Hybrid bundles fixed-network and mobile technology in a single router. To date, 370 thousand customers, primarily based in rural areas, have selected this innovative product.

By the end of 2017, we had also connected a total of 218 thousand apartments to our network through our partnerships in the housing sector.

Wholesale

As of December 31, 2017, fiber-optic lines accounted for 32.1 percent of all lines – 10.0 percentage points higher than the prior-year figure. The strong growth in our wholesale unbundled lines by 1.3 million or 31.5 percent compared with 2016 was primarily attributable to the strong demand for our contingent model. By contrast, the number of bundled wholesale lines decreased by 65 thousand. This trend is likely to continue for the next few years due to the fact that our competitors are switching from bundled to unbundled wholesale products with more bandwidth, or to their own infrastructure. The number of unbundled local loop lines decreased by 1.1 million or 14.7 percent compared with the end of the prior year. This is due first to the move to higher-quality fiber-optic wholesale lines, and second to retail customers switching to cable operators. In addition, wholesale customers are migrating their retail customers to their own fiber-optic lines. The total number of lines in the wholesale sector increased compared with 2016 to 11.8 million.

Development of operations

millions of €

2017

2016

Change

Change %

2015

Total revenue

21,931

21,774

157

0.7

22,185

Consumers

11,797

11,739

58

0.5

12,146

Business Customers a

6,017

5,923

94

1.6

5,943

Wholesale

3,747

3,742

5

0.1

3,677

Other a

370

370

0

0.0

419

Profit from operations(EBIT)

4,334

3,624

710

19.6

4,081

EBIT margin

%

19.8

16.6

18.4

Depreciation, amortization and impairment losses

(3,828)

(3,703)

(125)

(3.4)

(3,646)

EBITDA

8,162

7,327

835

11.4

7,728

Special factors affecting EBITDA

(306)

(910)

604

66.4

(545)

EBITDA (adjusted for special factors)

8,468

8,237

231

2.8

8,273

EBITDA margin (adjusted for special factors)

%

38.6

37.8

37.3

Cash Capex

(4,214)

(4,031)

(183)

(4.5)

(5,459)

a As of July 1, 2017, a share of revenue previously recognized under “Other” was assigned to Business Customers on account of a reorganization. Prior-year figures have not been adjusted.

Total revenue

Total revenue increased by 0.7 percent year-on-year in 2017, due mainly to a 2.5 percent rise in mobile revenues and a 10.8&nbsp;percent growth in non-contract handset revenues. Higher IT and broadband revenues also had a positive impact on fixed-network revenue. This was not quite sufficient to completely offset the decrease of 0.9 percent in fixed-network revenue compared with 2016.

Revenue from Consumers grew by 0.5 percent year-on-year. Volume-related revenue decreases continued to drive the traditional fixed-network business. By contrast, revenue from broadband business increased by 1.1 percent, while revenue from mobile business increased by 2.3 percent, primarily due to successful terminal equipment sales.

Revenue from Business Customers increased by 1.6 percent, with mobile revenues increasing by 2.7 percent and IT revenues by 19.5 percent compared with 2016. In the fixed network, by contrast, a decline was recorded in traditional voice telephony, due largely to the increasing number of customers moving to flat-rate plans.

Wholesalerevenue remained at the prior-year level in 2017. Adjusted for regulatory price effects (from December 1, 2016), there was a positive trend, thanks primarily to higher revenues with unbundled lines, in particular as part of our contingent model.

EBITDA, adjusted EBITDA

EBITDA amounted to EUR 8.2 billion in 2017, an increase of 11.4 percent against the prior year, due mainly to lower special factors for expenses in connection with our staff restructuring. EBITDA adjusted for special factors increased by 2.8 percent compared with 2016 in the reporting year to EUR 8.5 billion, driven mainly by efficiency enhancement measures in all functions while revenue increased slightly. Our adjusted EBITDA margin increased to 38.6 percent (prior-year figure: 37.8 percent).

EBIT

Profit from operations increased by 19.6 percent year-on-year to EUR 4.3 billion. The increase in the level of EBITDA more than offset the slight increase in depreciation, amortization and impairment losses.

Cash Capex

Cash capex increased year-on-year by 4.5 percent. As part of our integrated network strategy, we again made significant investments in the broadband and fiber-optic roll-out, our IP transformation, and our mobile infrastructure.